0 sats \ 4 replies \ @kr 2 Mar 2023 \ on: Silvergate warns investors it may not survive the year, shares drop 30% bitcoin
curious to know if anyone on here has strong opinions about Silvergate’s survival odds.
looks like they’re down 45% pre-market today.
As of 12/31 they had 2.8b in cash, and 10b in “securities” of unknown quality.
On the other side, they had 10b of deposits and 4.2B of short-term obligations.
My guess is they pledged their securities and got that 4.2B. No one will give them anymore money.
So, they have very little cash cushion. If their securities drop, they will be margin called and go out of business.
Wouldn’t really touch it at this point, because the odds of their random securities dropping as the Feds continue to raise rates are pretty high.
Normally, they would be acquired before bankruptcy, but with choke point 2.0 in full swing, not many people would want to touch it.
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Thanks for this analysis. I was about to buy 100 shares thinking it is a distressed asset that COULD recover. But the liquidity crunch makes it look very risky.
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appreciate the reasonable assessment.
the ongoing investigations aren’t helping either, and just saw on Twitter that Coinbase dropped them as a banking partner.
i hope they can pull off a miracle and stay alive, but the odds do seem to be stacked against them.
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Just looked at their securities mix - 47% are mortgages which would sell at a massive loss if liquidated. It really does look terrible for them, and they are entering a death spiral.
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